Whether you are an experienced serial businessman, or the first businessman, in many cases during the initial stage, the pre-income stage of the new company, entrepreneurship / founder will turn to family and friends for initial investment, and this is called an angel investment round. But there are a number of things and not when it comes to asking for capital from an angel.

First and foremost, while angel investors often have high-value individuals, which do not always occur. And asking them for funds for your company is securities offer, regulated by the law of federal securities and states. Thus, one of the “do’s” for entrepreneurs / founders is to ensure their angels are “accredited investors” because the term is defined in regulations from the law of federal securities, or have appropriate exceptions.

Second, you can give angels with a business plan, or prepare a PowerPoint slide presentation, to tell them about your plan for the company. Because this is a personal offer, there are no requirements set for what must be disclosed to your angels. However, this is what is important “do not”: all information submitted to your angel investors must be factual, and the founder may be responsible if it is found that it provides materially wrong information or fraud to those used by them. as a basis for investing. So, make sure you present the information you spend, such as the company’s revenue projection, with a language that shows that projections are based on estimates, and the actual results can vary in material from what is projected as income.

It is important for you to advise your family and friends that investment in a new startup company is a very risky business, and if they harm risk, they should not include capital into the company. The founder can make analogy that invest in the company is the same as buying Powerball tickets; There may be a great profit if the company is a winner, but in all possibilities, there are also total loss of investment.

One more important “do” for entrepreneurs / founders: After you have many angels investing in the company, they might be ordinary shareholders. You don’t want to have to track your relatives and friends for their agreement for certain problems, such as further financing. You prefer if they can appoint one person to represent his ownership, and sign on behalf of the group. To achieve this goal, the founder must ensure that angels form a special objective entity, such as limited partnerships, and so, only general partners of the investment group that must sign the new company’s approval and management will not be hampered by pursuing friends and family.